Daylight On Diabetes Drugs: Nevada Bill Would Track Insulin Makers’ Profits

KFF Health News, June 7, 2017

Prominent patient advocacy groups, such as the American Diabetes Association, have been silent while diabetes patients championed the bill— a silence that patients and experts say stems from financial ties.

This article first appeared June 07, 2017 on Kaiser Health News.

By Emily Kopp

Patients notched a rare win over the pharmaceutical industry Monday when the Nevada Legislature revived a bill requiring insulin makers to disclose the profits they make on the life-sustaining drug. In a handful of other states, bills addressing drug prices have stalled.

Many of the 1.25 million Americans who live with Type 1 diabetes cheered the legislative effort in Nevada as an important first step in their fight against skyrocketing costs of a drug on which their lives depend. The cost of insulin medications has steadily risen over the past decade by nearly 300 percent.

Prominent patient advocacy groups, like the American Diabetes Association, have maintained stony silence while diabetes patients championed the bill and lobbied the legislature during this debate — a silence that patients and experts say stems from financial ties.

“Normally all of the patient advocacy groups rally around causes and piggyback on each other in a productive way — that’s what advocacy groups are good at — but that hasn’t been the case here,” said Thom Scher, chief operating officer of Beyond Type 1, which does not accept donations from the pharmaceutical industry. Beyond Type 1 has not issued a formal opinion on the Nevada bill.

Many of the dozens of U.S. diabetes advocacy organizations, large and small, garner significant portions of their funding from insulin manufacturers. The Nevada bill also requires such organizations operating in-state to disclose all contributions they receive from the pharmaceutical industry to discourage that sort of conflict.

In 2016, two of the “big three” insulin producers — Eli Lilly and Sanofi — contributed at least $4.7 million to such national patient advocacy groups as the American Diabetes Association, Diabetes Patient Advocacy Coalition (DPAC), JDRF International and the Diabetes Hands Foundation, according to company disclosures. The third major insulin manufacturer, Novo Nordisk, does not disclose its charitable contributions.

The advocacy groups have taken no position on the Nevada legislation. Generally speaking, their advocacy focuses on pressuring insurers to pay the price of insulin, not protesting price rises.

Local diabetes groups, hardly free from conflicts with the pharmaceutical industry, have also stayed on the sidelines.

The Nevada Diabetes Association for Children and Adults officially issued a neutral opinion.

“The Nevada Diabetes Association supports regulations on medications. The problem with SB 265 is that it is not just regulating medication but the industry,” said Executive Director Sarah Gleich.

The nonprofit does not list its fiscal sponsors on its website or most recent 990 tax form.

“We disclose what we have received, and the IRS does not require that we publicly publish from whom,” Gleich said. “No one is giving out their invitation list to the party.”

Gleich said the Nevada Diabetes Association receives table sponsorships and supplies for camp programs from the pharmaceutical industry but “nothing that would make a dent on the budget.” Auditing non-monetary donations in order to meet the bill’s transparency requirement would be burdensome, Gleich said.

Membership dues accounted for only about $6,000 of the group’s $320,000 in revenue last year, according to its latest tax form.

The American Diabetes Association — which operates a Nevada chapter — accepted at least $3.9 million from Eli Lilly and Sanofi last year.

“The American Diabetes Association believes that no individual in need of lifesaving medications such as insulin should ever go without due to prohibitive costs,” Michelle Kirkwood, its director of strategic communications and media relations, said in a statement. She would not say whether the nonprofit supports the bill.

Former American Diabetes Association president Larry Hausner wrote an op-ed in the Nevada Appeal opposing the legislation. “Caring for people with diabetes involves more than what they pay for insulin or another medication,” Hausner wrote. “As a lifelong patient advocate, I know Nevadans expect more out of their elected officials.” Hausner, now the president of a consulting and public affairs firm, serves on the board of directors of Research!America, a nonprofit promoting increased federal funding for public health research, alongside Sanofi’s president of global research & development, Elias Zerhouni.

The Diabetes Hands Foundation expressed neutrality on the bill. “This state priority in Nevada is a good step towards a larger conversation about the costs of chronic care conditions like diabetes,” said the foundation’s director of advocacy, Mandy Jones. “But it’s hard to know the particular outcome of this particular bill in the U.S. market.”

JDRF International would not comment. DPAC deferred questions to the National Diabetes Volunteer Leadership Council.

Against the backdrop of silence from these patient advocacy groups, a community of diabetes patients on Twitter elevated the bill’s profile around the hashtag #insulin4all, created by T1International, a group in the United Kingdom that does not accept pharmaceutical donations.

“People feel frustrated. At the federal level, we’re not being seen because there’s so much going on politically,” said Erin Gilmer, a Colorado advocate with Type 1 diabetes. “It might have to be a state-by-state movement.”

Sen. Yvanna Cancela, who sponsored the bill, said she believed requiring diabetes advocacy groups to reveal their sources of funding was key to understanding their positions and bringing prices down. “I believe there should be transparency across the health care system,” Cancela said.

Gov. Brian Sandoval said Monday night that he intends to sign the bill, according to a Nevada Independent reporter. If the governor takes no action, the transparency rules become law. The bill, SB539, incorporates provisions of an earlier bill approved by the legislature but vetoed by Sandoval. Sponsors stripped a controversial provision that would have required insulin manufacturers to warn patients 90 days before raising prices, which stoked concerns about drug stockpiling, the Associated Press reported Monday.

The Nevada bill “is definitely a step in the right direction,” said Elizabeth Rowley, founder and director of T1International. “Almost anything requiring more transparency is incredibly important right now, especially at a time when almost all diabetes patient advocacy groups take funding from drug and device companies.”

Laura Marston, an advocate in Washington, D.C., with Type 1 diabetes, said that there is plenty of grass-roots support for legislation on insulin prices but that advocacy organizations are not listening to the right people.

“There should be more focus on the one thing we need to survive. … Without insulin, I die a horrendous death in 12 to 24 hours,” Marston said. “No grass-roots support? There’s desperation.”

KHN’s coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation.

CA's Single-Payer Proposal Embraces Some Costly Old Ways

KFF Health News, May 31, 2017

The $400 billion single-payer proposal that’s advancing in the California legislature would restore fee-for-service to its once-dominant perch in California.

This article first appeared May 31, 2017 on Kaiser Health News.

By Chad Terhune

Three of the dirtiest words in health care are “fee for service.”

For years, U.S. officials have sought to move Medicare away from paying doctors and hospitals for each task they perform, a costly approach that rewards the quantity of care over quality. State Medicaid programs and private insurers are pursuing similar changes.

Yet the $400 billion single-payer proposal that’s advancing in the California legislature would restore fee-for-service to its once-dominant perch in California.

A state Senate analysis released last week warned that fee-for-service and other provisions in the legislation would “strongly limit the state’s ability to control costs.” Cost containment will be key in persuading lawmakers and the public to support the increased taxes that would be necessary to finance this ambitious, universal health care system for 39 million Californians.

Several health experts expressed skepticism about the bill’s prospects in its current form.

“Single-payer has its pros and cons, but if it’s built on the foundation of fee-for-service it will be a disaster,” said Stephen Shortell, dean emeritus of the School of Public Health at the University of California-Berkeley. “It would be a huge step backwards in delivering health care.”

Paul Ginsburg, a health economist and professor at the University of Southern California, agreed and said the legislation reads like something out of the 1960s in terms of how it wants to reimburse providers.

“There’s broad consensus we ought to go from volume to value. This bill ignores all the signs pointing to progress and advocates a system that failed,” he said.

Backers of the Healthy California proposal are pushing for a vote in the Senate by Friday so the legislation can go to the state Assembly and remain in play for this year’s session.

The authors say that their single-payer proposal won’t rely entirely on old-fashioned fee-for-service and that there’s plenty of time for the bill to be amended. According to the authors, some of the criticism in the legislative analysis reflects a misreading of the bill: It would, they say, include some use of managed care.

In managed care organizations such as HMOs, providers receive a lump sum every month based on their per-capita enrollment. The idea is to encourage providers to offer preventive care and to scrutinize every test or treatment, since they bear the losses if they go over budget.

More than other states, California embraced this approach. In its Medicaid program, about 80 percent of enrollees are in managed care.

Michael Lighty, director of public policy for the California Nurses Association/National Nurses United, the lead sponsor of the California bill said “it will be a mixed-payment approach. Per capita payments are envisioned in this system.”

“We want to address how different payment methodologies work before mandating specifics in the bill,” he added.

Lighty said more provisions to curtail costs will be added shortly.

As opposition builds over congressional efforts to dismantle the Affordable Care Act, progressives in California and New York have responded to the ACA repeal threat by crafting proposals for universal coverage. (Such efforts failed earlier in Vermont and Colorado.)

Single-payer supporters are tapping into Americans’ deep dissatisfaction with the high costs and red tape embedded in the current hodgepodge of private insurance and public programs. But some defenders of the existing national health law say single-payer proposals are a costly distraction from the immediate fight in Washington over the health care safety net that millions of Americans rely on.

The California legislation, Senate Bill 562, requires that payments to providers be made on a “fee-for-service basis unless and until another payment methodology is established by the [Healthy California] board,” according to the bill.

It says health care delivery systems can choose to be paid on a capitated basis. But the analysis by the state Senate Appropriations Committee said it may be difficult for the single-payer program to establish such a payment system because of other features in the law, such as patients’ ability to see any provider with no referral necessary. A report in April from the state Senate Health Committee made a similar determination, saying multiple provisions in this bill “would make cost control unlikely to occur.”

The bill doesn’t address other innovative approaches being rolled out across California and the country. For instance, Medicare and private insurers are shifting to “bundled payments” for knee and hip surgeries, in which providers are paid a set fee for all treatment. More physician groups and hospitals are forming accountable care organizations (ACOs), which try to coordinate care within a budget.

While fee-for-service medicine can lead to excessive spending, Lighty said, ACOs and other “pay-for-performance” initiatives haven’t been entirely effective at reining in costs either.

The California bill faces another daunting challenge: coming up with the estimated $400 billion annually required to pay for universal coverage. Existing government money used for health care could cover half of that amount, but the other half may need to come from payroll taxes on workers and employers — not a politically palatable prospect. (The taxes could be offset in some measure by reduced health spending by employers and workers.)

Every Californian, regardless of age, employment or immigration status, would be eligible for coverage and there would be no premiums, copayments or deductibles. In addition, patients could see any willing provider without a referral and receive any service deemed medically appropriate.

Those factors would make it difficult for the program to use “drug formularies, prior authorization requirements or other utilization management tools,” the Senate analysts wrote. As a result, they estimated that health care utilization may increase by 10 percent compared to fee-for-service in Medi-Cal, the state’s Medicaid program.

At a hearing May 22, state Sen. Jim Nielsen (R-Tehama) said the single-payer proposal appears to invite patients to “come in for what’s almost like a blank check.”

State Sen. Ricardo Lara (D-Bell Gardens), a chief sponsor of the bill, acknowledged the concern and said he’s looking at what single-payer systems outside the U.S. do to contain costs.

The bill’s sponsors are opposed to the proliferation of narrow insurance networks that exclude providers to keep costs down. But the Senate analysis said that approach means the state couldn’t use potential exclusion from the single-payer system as a means of negotiating favorable prices, as health insurers often do.

Lighty said significant costs can be pared from the current system in other ways. For instance, consumers will no longer subsidize lavish salaries for hospital CEOs and excessive profits because reimbursements will be tied to “efficiently providing health care services.”

Lara said eliminating the middleman role of health insurers and consolidating the state’s purchasing power would lead to huge savings. “By pooling health care funds in a publicly run fund, we get the bargaining power of the seventh-largest economy in the world,” he said.

Insurers and brokers in California and nationwide oppose single-payer proposals because they could literally put them out of business. And legislative analysts and health policy experts question whether California would be able to exert sufficient bargaining power. They noted the political constraints that Medicare has faced in flexing its market power on prices.

“Our system of government may mean single-payer is much less successful than in other countries,” Ginsburg said. “We are so open to lobbying it means we can’t count on some of the very strong actions other countries have taken to keep costs down.”

Target Of Medicare Insider Trading Case Boasted He Was Unstoppable 'Beast'

KFF Health News, May 30, 2017

Federal prosecutors have announced an indictment against David Blaszczak and three co-defendants, including an executive-level Medicare employee, for allegedly turning confidential government information into windfall profits on Wall Street.

This article first appeared May 30, 2017 on Kaiser Health News.

By Christina Jewett and Melissa Bailey

In his prime, consultant David Blaszczak bragged that he made millions for his hedge-fund clients when he predicted important Medicare funding changes.

“Warren Buffett can eat it,” Blaszczak wrote in one email in 2013, referencing the legendary stock trader.

He boasted in that same year to a finance executive: “I am a beast that cannot be stopped.”

Stopped he was on Wednesday, when federal prosecutors announced an indictment against Blaszczak and three co-defendants, including an executive-level Medicare employee, for allegedly turning confidential government information into windfall profits on Wall Street. The Securities and Exchange Commission also has alleged securities law violations, seeking to recoup $3.9 million in “ill-gotten gains.”

The case targets the narrow but lucrative world of “political intelligence,” a web of consulting firms like one that Blaszczak co-founded in 2014. Such firms traffic in crumbs of information coaxed out of federal employees, or simply good hunches, and make money by landing contracts with Wall Street firms.

Political intelligence workers track countless decisions Medicare and the Food and Drug Administration make each month about which hospital beds, heart valves, surgical techniques or drugs will rise or fall in value — or if the government will pay for them at all.

It’s a Washington, D.C., industry that reflects the big business of U.S. health care. While patients who get radiation treatments for cancer or dialysis after kidney failure are largely unaware, small tweaks in what the government pays for these services can mean millions to hedge funds and their elite investors.

From the outside, the tips that Blaszczak fed to Wall Street clients on Medicare’s coming moves seemed uncanny. Federal investigators found time and again that each disclosure started with a meeting with Christopher Worrall, an executive staff member with the Centers for Medicaid & Medicare Services who started at the agency in 1999.

The two men became friends in 2001, records show, and began meeting for lunch, golf rounds and baseball games. Blaszczak worked at CMS from 2000 to 2005 as a health insurance specialist and, later, as special assistant to the CMS administrator. Blaszczak introduced Worrall to a political intelligence contact in 2011 who offered him a job, the SEC complaint says. Worrall declined but leveraged the offer for a $10,000 raise from Medicare, according to court records.

Prosecutors say Worrall also wrote in an email to his wife that working in political intelligence could be a “big opportunity” because of the “political links.”

“If I ever do want to really get into politics, like run for Congress, these are the types of people I’d need to be around,” Worrall said, according to the SEC complaint.

Blaszczak and Worrall had one of their meetings on May 8, 2012, at the Medicare headquarters in Baltimore, where Worrall signed his friend in as a guest. That day, prosecutors allege, Blaszczak learned that Medicare was planning to cut the amount it reimburses doctors who used certain types of therapy on cancer patients: intensity modulated radiation therapy and stereotactic body radiotherapy.

The following day, Blaszczak relayed the information to three contacts at Deerfield Management, a health-focused hedge-fund firm. All three men have been charged in the case.

Within weeks, the information led to short sales by the hedge-fund firm in three stocks that make radiation equipment and software. Because short sellers make money when a stock’s price falls, the move was essentially a bet in favor of the stocks tanking when news of the pay cut broke.

Just days after Medicare announced the proposed pay cuts in July 2012, the three stocks fell in value. For Deerfield-managed funds, it resulted in a big payday, worth more than $1.8 million, prosecutors say.

Blaszczak’s contacts at Deerfield were pleased; they sent his firm a $29,000 bonus. Ted Huber, 55, then a partner with Deerfield, credited Blaszczak: “I think Dave earned his bonus with his work on [radiology]. We did pretty well on that and it was really 100% Dave[,]” an email quoted in the indictment says.

Huber faces securities fraud, wire fraud and other charges in the case. His New York attorney, Barry Berke, said Huber “did absolutely nothing wrong.”

“Mr. Huber and his counsel look forward to his day in court where it will be shown that this prosecution is an ill-advised attempt to transform entirely innocent research and trading into a crime,” Berke said in an email.

Attorneys for Worrall and Blaszczak declined to comment; the law firm representing the fourth co-defendant, Deerfield partner Robert Olan, did not respond to requests for comment. All of the men are accused of 10 charges or more, some with maximum prison terms of 25 years, with Blaszczak facing 18 counts.

A CMS spokesman declined to comment when asked if Worrall still worked at the agency.

Deerfield said through a spokesman that it is “committed to maintaining a strict culture of compliance and the highest ethical standards. We are cooperating fully with the government’s investigation.”

Blaszczak’s note to investors predicting the radiation pay cut made its way back to Medicare, the indictment says. There, one staffer surmised someone had access to internal information. Another staffer replied: “Where does he get his information from? It is pretty unbelievable and will probably blow up at some point.”

With Worrall continuing to feed him information, prosecutors say, Blaszczak’s run continued. The two men had lunch together in January 2013 and again in March at the Medicare agency’s headquarters in Baltimore.

Soon after, Blaszczak sent a note to clients and heard back from Jordan Fogel, one of the hedge-fund contacts alleged to have profited from the radiation prediction. Fogel emailed that he wanted to “catch up soon and figure out how we can re-ignite the Blaszczak-Fogel money printing machine,” according to an email cited in the indictment.

Fogel, 33, pleaded guilty this month in the case to six counts, including conspiracy to commit securities fraud and defraud the U.S., and is cooperating with prosecutors.

Prosecutors say that on March 5, 2013, Blaszczak offered to introduce Worrall to a staffer on the Senate Finance Committee, which oversees Medicare. According to the indictment, Blaszczak wrote in an email: “after a certain amount of years in the government your knowledge and experience is going to be extremely valuable. You might as well meet as many people as possible along the way.”

Worrall replied: “I do appreciate you making offers to put me in touch with people like this.”

Later that month, Worrall allegedly gave Blaszczak confidential internal documents laying out a plan for Medicare to slash its pay rates for dialysis. Worrall oversaw a “real-time” database at Medicare showing a decline in the use of medications in dialysis, lowering the cost of care for major providers of outpatient dialysis services like Fresenius and DaVita.

Other investors were predicting a pay cut, based on public reports about the decline in drug use. But, according to the indictment, Blaszczak told contacts he had an inside track and predicted a steeper cut than anyone: 12 percent.

That summer, Worrall and Blaszczak went to a baseball game together, and Blaszczak continued to assure his hedge-fund clients that the dialysis pay cut would be significant. His contacts put in their short sales, betting that the stocks for Fresenius would soon fall.

On July 1, 2013, Medicare unveiled the proposed 12 percent cut, and soon the stock fell nearly 9 percent. The tip was worth $865,000 to the Blaszczak clients who are also accused of fraud, the indictment says. It was then, prosecutors allege, that Blaszczak boasted of being the “beast that cannot be stopped,” and revealed to his clients that internal Medicare documents guided his prediction.

Fogel expressed regret over not making a bigger bet on Blaszczak’s advice: “Wish we didn’t wuss out but will still make a couple million on it,” he wrote in an email, according to the indictment.

Soon after, prosecutors allege, Fogel’s firm renewed a contract with Blaszczak for $100,000.

Prosecutors did not claim that Worrall shared any of Blaszczak’s rewards. The cases rely on the 2012 Stop Trading on Congressional Knowledge (STOCK) Act, meant to cut down on insider trading by members of Congress, their staffs and executive branch employees.

Prosecutors say they pursue the cases to protect against corruption within government and cheating on Wall Street, according to a statement from Joon H. Kim, acting U.S. attorney for the Southern District of New York.

The indictment gives little detail of the men’s interactions after 2013, save for a 2014 email exchange between Blaszczak and Worrall. In August of that year, Blaszczak asked Worrall to become a “part owner” of a new political intelligence company he was starting, saying he expected that he and two partners would make $2 million that year.

Blaszczak wrote that the men would “kill it working together.”

Worrall replied: “You’re like a drunk whore to me. Hard to resist. Lol. Let’s talk.”

Molina Healthcare, A Top Obamacare Insurer, Investigates Breach Of Patients’ Data

KFF Health News, May 30, 2017

The company closed the online portal for medical claims and other customer information while it examined a “security vulnerability.”

This article first appeared May 26, 2017 on Kaiser Health News.

By Chad Terhune

Molina Healthcare, a major insurer in Medicaid and state exchanges across the country, has shut down its online patient portal as it investigates a potential data breach that may have exposed sensitive medical information.

The company said Friday that it closed the online portal for medical claims and other customer information while it examined a “security vulnerability.” It’s not clear how many patient records might have been exposed and for how long. The company has more than 4.8 million customers in 12 states and Puerto Rico.

“We are in the process of conducting an internal investigation to determine the impact, if any, to our customers’ information and will provide any applicable notifications to customers and/or regulatory authorities,” Molina said in a statement Friday. “Protecting our members’ information is of utmost importance.”

Brian Krebs, a well-known cybersecurity expert who runs the Krebs on Security website, said he notified the company of the potential breach earlier this month and wrote about it on his website Thursday. Molina said it was already aware of the security vulnerability when contacted.

Until recently, Krebs said, Molina “was exposing countless patient medical claims to the entire internet without requiring any authentication.”

Krebs said the information he saw online included patients’ names, addresses, dates of birth and information on their medical procedures and medications.

“It’s unconscionable that such a basic, security 101 flaw could still exist at a major health care provider,” Krebs said. “This information is more sensitive than credit card data, but it seems less protected.”

Krebs said he received an anonymous tip in April from a Molina member who stumbled upon the problem when trying to view his medical claim online. The tipster found that by changing a single number in the website address he could then view other patient claims, according to Krebs.

Krebs said the Molina member showed him screenshots of his own medical records and how when he changed the web address slightly it then displayed records of another patient. On Friday, the Molina website told customers that the online portal was “under maintenance.”

Health care companies, hospitals and other providers must report data breaches to U.S. officials. Molina emphasized that it was still investigating the matter so had not yet reported it. Federal regulators can levy significant fines for violations under the Health Insurance Portability and Accountability Act, also known as HIPAA.

Many security experts question the ability of health care companies and providers to safeguard vast troves of electronic medical records and other sensitive data, particularly at a time when cybercriminals are targeting medical information.

Molina, based in Long Beach, Calif., posted $17.8 billion in annual revenue last year.

Molina made news earlier this month with the surprise firing of its top two executives, who are sons of the company’s founder. Both CEO J. Mario Molina and his brother, finance chief John Molina, were ousted. The company’s board said Molina’s disappointing financial performance led to the management change.

Molina has grown more prominent during the rollout of the Affordable Care Act, as Medicaid expanded and state insurance exchanges launched. The company serves more than 1 million people through Obamacare exchanges across several states. It has nearly 69,000 enrollees in the Covered California exchange, or about 5 percent of the market.

This story was produced by Kaiser Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.

Millions Of Ill People May Face ‘Extremely High Premiums’ Under House Bill, CBO Says

KFF Health News, May 25, 2017

The GOP bill passed by the House would leave as many as one-sixth of Americans living in states where older and sicker people might have to pay much more for their health care or be unable to purchase insurance at all, the Congressional Budget Office said Wednesday.

This article first appeared May 25, 2017 on Kaiser Health News.

By Julie Rovner

The Republican overhaul of the federal health law passed by the House this month would result in slightly lower premiums and slightly fewer uninsured Americans than an earlier proposal. But it would leave as many as one-sixth of Americans living in states where older and sicker people might have to pay much more for their health care or be unable to purchase insurance at all, the Congressional Budget Office said Wednesday.

In some states, said the report, “less healthy people would face extremely high premiums, despite the additional funding that would be available” in the bill to help offset those increases.

The report incorporates the changes to the bill made just before it narrowly passed the House on May 4. Those changes included an amendment offered by Rep. Tom MacArthur (R-N.J.) that would let states waive some key provisions of the health law, including requirements to cover “essential health benefits” and to offer insurance to people with preexisting conditions at no extra cost.

CBO said the current version would result in savings of $119 billion over 10 years and 23 million more uninsured people than would be expected under the current law.

According to the estimate, premiums would be slightly lower than under the Affordable Care Act, but mostly because “the insurance, on average, would pay for a smaller proportion of health care costs.”

Prior to the changes, the CBO estimated that the bill would result in savings of $150 billion over the next decade and grow the number of uninsured Americans by 24 million. That dollar figure was a considerable change from the original version of the bill that CBO said would have saved $337 billion, but lawmakers decided to spend back some of those savings on help for those likely to be cut off from insurance.

The two earliest versions of the bill could not muster enough support for the House leadership to bring them to a vote on the floor. Later, MacArthur and leaders of the conservative Freedom Caucus negotiated changes that they said should help bring down premium costs for consumers. That is the bill approved and now evaluated by CBO.

The CBO also estimated that in states deciding to take the option to waive requirements related to charging sicker people more, “the nongroup market would start to become unstable.” In particular, said the report, “people who are less healthy (including those with preexisting or newly acquired medical conditions) would ultimately be unable to purchase comprehensive nongroup health insurance at premiums comparable to those under current law, if they could purchase it at all.”

And in states that chose to waive the requirements for essential benefits, even people with insurance “would experience substantial increases in what they would spend on health care,” because their policies might no longer cover expensive treatments like those for maternity care or mental health and substance abuse.

Despite repeated claims from President Donald Trump and congressional Republicans that the Affordable Care Act is collapsing, the CBO specifically said that the market would continue “to be stable in most areas” under current law. It predicted the same for the original version of the House bill.

In fact, the only place the CBO specifically said the individual insurance market might become unstable is in states that decide to waive the ACA’s coverage requirements. It did not guess which states might do that, but the report says that one-sixth of the population could be subject to that instability.

“What is clear is that these waivers make life much, much worse for people with preexisting conditions, for older people, for sicker people,” said Aviva Aron-Dine, a senior fellow at the Center on Budget and Policy Priorities and former Obama administration health staffer.

The savings in the bill are mostly the result of capping federal funding to states for the Medicaid program for those with low incomes and scaling back the tax credits that help some people with low and modest incomes pay for private insurance. An estimated 14 million of the 23 million people who would no longer have insurance would otherwise have obtained it through Medicaid.

The bill would also repeal nearly all the taxes imposed in the ACA to pay for the new benefits, including taxes on wealthy individuals and much of the health industry.

Reaction to the new estimate fell mostly along predictable party lines.

“CBO continues to find that through our patient-focused bill, premiums will go down and that our reforms will help stabilize the market,” said a statement from House Energy and Commerce Committee Chairman Greg Walden (R-Ore.) and its health subcommittee chairman, Michael Burgess (R-Texas).

By contrast, Rep. Steny Hoyer (D-Md.) said the new estimate shows “TrumpCare will kick millions of Americans off their insurance coverage and force consumers to pay more for less.”

But the reaction was not completely partisan. Sen. Bill Cassidy (R-La.), a key swing vote in the Senate, said that “Congress’s focus must be to lower premiums with coverage which passes the Jimmy Kimmel test,” referring to the late-night host’s tearful monologue about the health problems of his newborn son. The House-passed bill, he said, “does not. I am working with Senate colleagues to do so.”

Needless Medical Tests Not Only Cost $200B — They Can Do Harm

KFF Health News, May 24, 2017

In California, that sense of frustration has led three of the state’s biggest healthcare purchasers to band together to promote care that’s safer and more cost-effective.

This article first appeared May 24, 2017 on Kaiser Health News.

By Chad Terhune

It’s common knowledge in medicine: Doctors routinely order tests on hospital patients that are unnecessary and wasteful. Sutter Health, a giant hospital chain in Northern California, thought it had found a simple solution.

The Sacramento-based health system deleted the button physicians used to order daily blood tests. “We took it out and couldn’t wait to see the data,” said Ann Marie Giusto, a Sutter Health executive.

Alas, the number of orders hardly changed. That’s because the hospital’s medical-records software “has this cool ability to let you save your favorites,” Giusto said at a recent presentation to other hospital executives and physicians. “It had become a habit.”

There are plenty of opportunities to trim waste in America’s $3.4 trillion health care system — but, as the Sutter example illustrates, it’s often not as simple as it seems.

Some experts estimate that at least $200 billion is wasted annually on excessive testing and treatment. This overly aggressive care also can harm patients, generating mistakes and injuries believed to cause 30,000 deaths each year.

“The changes that need to be made don’t appear unrealistic, yet they seem to take an awful lot of time,” said Dr. Jeff Rideout, chief executive of the Integrated Healthcare Association, an Oakland, Calif., nonprofit group that promotes quality improvement. “We’ve been patient for too long.”

In California, that sense of frustration has led three of the state’s biggest health care purchasers to band together to promote care that’s safer and more cost-effective. The California Public Employees’ Retirement System (CalPERS), the Covered California insurance exchange and the state’s Medicaid program, known as Medi-Cal — which collectively serve more than 15 million patients — are leading the initiative.

Progress may be slow, but there have been some encouraging signs. In San Diego, for instance, the Sharp Rees-Stealy Medical Group said it cut unnecessary lab tests by more than 10 percent by educating both doctors and patients about overuse.

A large public hospital, Los Angeles County-University of Southern California Medical Center, eliminated preoperative testing deemed superfluous before routine cataract surgery. As a result, patients on average received the surgery six months sooner.

These efforts were sparked by the Choosing Wisely campaign, a national effort launched in 2012 by the American Board of Internal Medicine (ABIM) Foundation. The group asked medical societies to identify at least five common tests or procedures that often provide little benefit.

The campaign, also backed by Consumer Reports, encourages medical providers to hand out wallet-sized cards to patients with questions they should ask to determine whether they truly need a procedure.

Critics have knocked Choosing Wisely for playing it too safe and not going after some of the more lucrative procedures, such as certain spine operations and arthroscopic knee surgeries.

Daniel Wolfson, chief operating officer at the ABIM Foundation, said the Choosing Wisely campaign has been successful at starting a national conversation about unwarranted care. “I think we need massive change and that takes 15 years,” Wolfson said.

The state effort, dubbed Smart Care California, is in the early stages as well.

Initially, the group has focused on cutting the number of elective cesarean sections, reducing opioid use and avoiding overtreatment for patients suffering low-back pain. In its contract with health insurers, the Covered California exchange requires that their in-network providers meet a range of quality standards, including low C-section rates.

Dr. Richard Sun, co-chairman of the Smart Care group and a medical consultant at CalPERS, said he’s pursuing safer, more affordable treatments for low-back pain, a condition that cost the state agency $107 million in 2015. “One challenge is developing metrics that everyone can agree upon to measure improvement,” he said.

For patients, overtreatment can be more than a minor annoyance. Galen Gunther, a 59-year-old from Oakland, said that during treatment for colorectal cancer a decade ago he was subjected needlessly to repeated blood draws, often because the doctors couldn’t get their hands on earlier results. Later, he said, he was overexposed to radiation, leaving him permanently scarred.

“Every doctor I saw wanted to run the same tests, over and over again,” Gunther said. “Nobody wanted to take responsibility for that.”

At Cedars-Sinai Medical Center in Los Angeles, officials said that economic incentives still drive hospitals to think that more is better.

“We have excellent patient outcomes, but it’s at a very high cost,” said Dr. Harry Sax, executive vice chairman for surgery at Cedars-Sinai. “There is still a continued financial incentive to do that test, do that procedure and do something more.”

In addition to financial motives, Sax said, many physicians still practice defensive medicine out of fear of malpractice litigation. Also, some patients and their families expect antibiotics to be prescribed for a sore throat or a CT scan for a bump on the head.

To cut down on needless care, Cedars-Sinai arranged for doctors to be alerted electronically when they ordered tests or drugs that run contrary to 18 Choosing Wisely recommendations.

The hospital analyzed alerts from 26,424 patient encounters from 2013 to 2016. All of the guidelines were followed in 6 percent of those cases, or 1,591 encounters.

Sax said Cedars-Sinai studied the rate of complications, readmissions, length of stay and direct cost of care among the patients in whose cases the guidelines were followed and compared those outcomes with cases where adherence was less than 50 percent.

In the group that didn’t follow the guidelines, patients had a 14 percent higher incidence of readmission and 29 percent higher risk of complications. Those complications and longer stays increased the cost of care by 7 percent, according to the hospital.

In 2013, the first year of implementation of Choosing Wisely guidelines, Cedars-Sinai said it avoided $6 million in medical spending.

For perspective, Cedars-Sinai is one the largest hospitals in the nation with $3.3 billion in revenue for the fiscal year ending June 30. It reported net income of $301 million.

In Northern California, Sutter has incorporated more than 130 Choosing Wisely recommendations as part of a broader effort to reduce variation in care. In all, Sutter said, it has saved about $66 million since 2011.

That’s a significant sum. However, during the same period, Sutter reported $2.7 billion in profits. Last year alone, it posted an operating profit of $554 million on revenue of nearly $12 billion.

Giusto said her team of employees tasked with changing physician behavior and eliminating these variations is separate from administrators who are focused on maximizing reimbursement. She said there can be conflicting forces within a hospital.

“We get real excited about a project with [emergency department] doctors on reducing CT scans for abdominal pain,” said Giusto, director of Sutter’s office of patient experience. “Then I can hear the administration say that was a fee-for-service patient. I just lost money, right?”

Giusto meets with doctors to present data on how many tests or prescriptions they order and how that compares to others. At one clinic, she shared slides showing that some doctors were ordering more than 70 opioid pills at a time while others prescribed fewer than 20. In response, Sutter set a goal of 28 tablets in hopes of reducing opioid abuse.

“Most of the physicians changed,” Giusto said. “But there were still two who said, ‘Screw it. I’m going to keep doing it.’”

Republicans Race The Clock On Health Care — But The Calendar Is Not Helping

KFF Health News, May 22, 2017

With summer just around the corner, and most of official Washington swept up in scandals surrounding President Trump, the health overhaul delays are starting to back up the rest of the 2018 agenda.

This article first appeared May 22, 2017 on Kaiser Health News.

By Julie Rovner

Back in January, Republicans boasted they would deliver a “repeal and replace” bill for the Affordable Care Act to President Donald Trump’s desk by the end of the month.

In the interim, that bravado has faded as their efforts stalled and they found out how complicated undoing a major law can be. With summer just around the corner, and most of official Washington swept up in scandals surrounding Trump, the health overhaul delays are starting to back up the rest of the 2018 agenda.

One of the immediate casualties is the renewal of the Children’s Health Insurance Program. CHIP covers just under 9 million children in low- and moderate-income families, at a cost of about $15 billion a year.

Funding for CHIP does not technically end until Sept. 30, but it is already too late for states to plan their budgets effectively. They needed to know about future funding while their legislatures were still in session, but, according to the National Conference of State Legislatures, the local lawmakers have already adjourned for the year in more than half of the states.

“If [Congress] had wanted to do what states needed with respect to CHIP, it would be done already,” said Joan Alker of the Georgetown Center for Children and Families.

“Certainty and predictability [are] important,” agreed Matt Salo, executive director of the National Association of Medicaid Directors. “If we don’t know that the money is going to be there, we have to start planning to dismantle things early, and that has a real human toll.”

In a March letter urging prompt action, the Medicaid directors noted that while the end of September might seem far off, “as the program nears the end of its congressional funding, states will be required to notify current CHIP beneficiaries of the termination of their coverage. This process may be required to begin as early as July in some states.”

CHIP has long been a bipartisan program — one of its original sponsors is Sen. Orrin Hatch (R-Utah), who chairs the Finance Committee that oversees it. It was created in 1997, and last reauthorized in 2015, for two years. But a Finance hearing that was intended to launch the effort to renew the program was abruptly canceled this month, amid suggestions that Republicans might want to hold the program’s renewal hostage to force Democrats and moderate Republicans to make concessions on the bill to replace the Affordable Care Act.

“It’s a very difficult time with respect to children’s coverage,” said Alker. Not only is the future of CHIP in doubt, but also the House-passed health bill would make major cuts to the Medicaid program, and many states have chosen to roll CHIP into the Medicaid program.”

“We’ve just achieved a historic level in coverage of kids,” she said, referring to a new report finding that more than 93 percent of eligible U.S. children now have health insurance under CHIP. “Now all three legs of that coverage stool — CHIP, Medicaid and ACA — are up for grabs.”

But it’s not just CHIP at risk due to the congested congressional calendar. Congress also can’t do the tax bill Republicans badly want until lawmakers wrap up the health bill.

That is because Republicans want to use the same budget procedure, called reconciliation, for both bills. That procedure forbids a filibuster in the Senate and allows passage with a simple majority.

There’s a catch, though. The health bill’s reconciliation instructions were part of the fiscal 2017 budget resolution, which Congress passed in January. Lawmakers would need to adopt a fiscal 2018 budget resolution in order to use the same fast-track procedures for their tax changes.

And they cannot do both at the same time. “Once Congress adopts a new budget resolution for fiscal year 2018,” said Ed Lorenzen, a budget-process expert at the Committee for a Responsible Federal Budget, that new resolution “supplants the fiscal year 2017 resolution and the reconciliation instructions in the fiscal year 2017 budget are moot.”

That means if Congress wanted to continue with the health bill, it would need 60 votes in the Senate, not a simple majority.

There is, however, a loophole of sorts. Congress “can start the next budget resolution before they finish health care,” said Lorenzen. “They just can’t finish the new budget resolution until they finish health care.”

So the House and Senate could each pass its own separate budget blueprint, and even meet to come to a consensus on its final product. But they cannot take the last step of the process — with each approving a conference report or identical resolutions — until the health bill is done or given up for dead. They could also start work on a tax plan, although, again, they could not take the bill to the floor of the Senate until they finish health care and the new budget resolution.

At least that’s what most budget experts and lawmakers assume. “There’s no precedent to go on,” said Lorenzen, because no budget reconciliation bill has taken Congress this far into a fiscal year. “So nobody really knows.”

CA Bill Addresses Safety Concerns At Dialysis Clinics

KFF Health News, May 19, 2017

The California bill, SB 349, says that inadequate staffing is leading to hospitalizations, medical errors and “unnecessary and avoidable deaths.”

This article first appeared May 19, 2017 on Kaiser Health News.

By Anna Gorman

Saying they are concerned about safety in California’s dialysis clinics, a coalition of nurses, technicians, patients and union representatives is backing legislation that would require more staffing and oversight.

The bill, introduced by Sen. Ricardo Lara (D-Bell Gardens), would establish minimum staffing ratios, mandate a longer transition time between appointments and require annual inspections of the state’s 562 licensed dialysis clinics.

More than 63,000 Californians receive hemodialysis, which filters impurities from the blood of those with end-stage kidney disease. Demand for the procedure is growing statewide and nationwide as the population ages and more people suffer from chronic conditions that can lead to kidney failure, such as diabetes, hypertension and heart disease.

If the legislation passes, California would join several other states that have imposed minimum ratios for dialysis centers, including Utah, South Carolina and New Jersey.

The California bill, SB 349, says that inadequate staffing is leading to hospitalizations, medical errors and “unnecessary and avoidable deaths.”

In one case, three patients contracted an infection at a dialysis clinic in Los Angeles County after workers failed to clean and disinfect the machines properly, according to a report in the American Journal of Infection Control.

Patients undergoing dialysis are at risk for low blood pressure, fluid buildup or infections.

Problems can be overlooked if nurses don’t have enough time to devote to their patients and to transition between patients, said Megallan Handford, a registered nurse at a dialysis clinic in Fontana who helped draft the bill. Handford said nurses and technicians often have too many patients at once, making it difficult to ensure they are getting safe care. In some cases, patients left dialysis before they were ready, only to die in their cars, he said.

“We deal with short staffing day in and day out. … Enough is enough,” Handford said during a briefing at the offices of Service Employees International Union-United Healthcare Workers West (SEIU-UHW), which is sponsoring the bill and hopes to unionize dialysis workers. “We’re gonna do what it takes to change this industry.”

Lara agreed, saying oversight of the state’s growing dialysis business is overdue. “We need to keep a closer eye on the dialysis industry,” Lara said in an email.

Dialysis clinics in the state argue that the industry is already well-regulated and the bill would add unnecessary requirements.

Clinics already have a difficult time hiring enough workers and would need even more to satisfy the proposed staff-to-patient ratios, said Kristi Foy, assistant director of the California Dialysis Council, the statewide association of clinics. Besides, she said, there is no evidence that mandated ratios improve quality or patient satisfaction.

Foy added that while there have been “isolated problems,” California is outperforming other states in quality and patient satisfaction. She said a larger percentage of California clinics have high ratings from the federal government, based on factors such as complications, mortality rates and hospitalizations.

“There is no documented need for this bill,” Foy said. “We are very, very concerned that it will result in unintended consequences that will be bad for patients.”

In a survey of dialysis clinics in the state, the council determined that more than 100 of them would be at risk of closing if the bill passed, in part because of the inability to find staff, Foy said. Clinics in rural areas and those who treat large numbers of Medi-Cal patients are particularly vulnerable, she said.

If ratios are put into place, clinics won’t have flexibility when people call in sick or for night shifts that typically require lighter staffing, said Dr. Bryan Wong, a Berkeley-based nephrologist. That could force clinics to offer fewer appointments or turn patients away, he said.

“It would drive up the cost of care because the patient would have to be hospitalized to get their treatment.”

Dr. Randall Maxey, another nephrologist and clinic owner, said the bill is well-intentioned, but he believes the industry is already the “most regulated in the world.”

“If you pass legislation to put more regulations in … there is going to be less dialysis available for people in certain neighborhoods,” he said.

The dialysis industry is largely controlled by two for-profit corporations: DaVita Kidney Care and Fresenius Medical Care, which own nearly three-quarters of the clinics in California. As the demand for dialysis has grown around the country, both companies have acquired smaller dialysis providers.

Meanwhile, studies have shown poorer patient outcomes at for-profit dialysis clinics than at nonprofit facilities. One 2010 study found that mortality rates were higher for patients treated at sites belonging to for-profit chains than for those at nonprofit companies. Another study published the same year, based on data from 2003, showed that patients treated at nonprofit clinics spent fewer days in the hospital.

Supporters of the proposed legislation argue that companies such as DaVita and Fresenius put profits above patient safety.

“This is an industry that is incredibly profitable,” said Joan Allen, government relations advocate at SEIU-UHW. “There is a financial choice that the dialysis industry needs to make, and that is whether they are going to invest in patient safety and patient care or whether they would make a financial choice to reduce access.”

Spokesmen for both DaVita and Fresenius said they were part of a coalition opposing the legislation but declined to comment further.

The bill would require clinics to have one nurse per eight patients and one technician per three patients. The measure would require that patient appointments be at least 45 minutes apart, which supporters say gives staff time to thoroughly clean the equipment and ensure departing patients are safe.

The legislation would also mandate the state Department of Public Health to inspect dialysis centers annually. Lara said clinics are only inspected now about once every six years.

At the SEIU-UHW office in Commerce last week, dialysis technician Carlos Castillo explained why he supports the bill. Watching too many patients at once can be dangerous, he said, especially if one has an emergency. “Dialysis isn’t just about putting needles in patients,” he said. “You never know what will happen.”

Vince Gonzales, 54, who has been on dialysis for 20 years, recalled seeing a patient collapse in his chair and die.

“[Clinic staff] are so busy doing the things they are doing,” he said. “I always have that concern of, ‘Can you take care of me adequately?”

UnitedHealth Headquarters

UnitedHealth Doctored Medicare Records, Overbilled U.S. By $1 Billion, Feds Claim

KFF Health News, May 18, 2017

This week’s filing is the second time that the Justice Department has intervened to support a whistleblower suing UnitedHealth under the federal False Claims Act.

This article first appeared May 17, 2017 on Kaiser Health News.

By Fred Schulte

The Justice Department on Tuesday accused giant insurer UnitedHealth Group of overcharging the federal government by more than $1 billion through its Medicare Advantage plans.

In a 79-page lawsuit filed in Los Angeles, the Justice Department alleged that the insurer made patients appear sicker than they were in order to collect higher Medicare payments than it deserved. The government said it had “conservatively estimated” that the company “knowingly and improperly avoided repaying Medicare” for more than a billion dollars over the course of the decade-long scheme.

“To ensure that the program remains viable for all beneficiaries, the Justice Department remains tireless in its pursuit of Medicare fraud perpetrated by healthcare providers and insurers,” said acting U.S. Attorney Sandra R. Brown for the Central District of California, in a statement announcing the suit. “The primary goal of publicly funded healthcare programs like Medicare is to provide high-quality medical services to those in need — not to line the pockets of participants willing to abuse the system.”

Tuesday’s filing is the second time that the Justice Department has intervened to support a whistleblower suing UnitedHealth under the federal False Claims Act. Earlier this month, the government joined a similar case brought by California whistleblower James Swoben in 2009. Swoben, a medical data consultant, also alleges that UnitedHealth overbilled Medicare.

The case joined on Tuesday was first filed in 2011 by Benjamin Poehling, a former finance director for the UnitedHealth division that oversees Medicare Advantage Plans. Under the False Claims Act, private parties can sue on behalf of the federal government and receive a share of any money recovered.

UnitedHealth is the nation’s biggest Medicare Advantage operator covering about 3.6 million patients in 2016, when Medicare paid the company $56 billion, according to the complaint.

Medicare Advantage plans are private insurance plans offered as an alternative to traditional fee-for-service option.

Medicare pays the health plans using a complex formula called a risk score, which is supposed to pay higher rates for sicker patients than for people in good health. But waste and overspending tied to inflated risk scores has repeatedly been cited by government auditors, including the Government Accountability Office. A series of articles published in 2014 by the Center for Public Integrity concluded that improper payments linked to jacked-up risk scores have cost taxpayers tens of billions of dollars.

Tuesday’s court filing argues that UnitedHealth repeatedly ignored findings from its own auditors that risk scores were often inflated — and warnings by officials from the Centers for Medicare & Medicaid Services (CMS) — that it was responsible for ensuring the billings it submitted were accurate.

UnitedHealth denied wrongdoing and said it would contest the case.

“We are confident our company and our employees complied with the government’s Medicare Advantage program rules, and we have been transparent with CMS about our approach under its unclear policies,” UnitedHealth spokesman Matt Burns said in a statement.

Burns went on to say that the Justice Department “fundamentally misunderstands or is deliberately ignoring how the Medicare Advantage program works. We reject these claims and will contest them vigorously.”

A spokesman for CMS, which has recently faced congressional criticism for lax oversight of the program, declined comment.

Central to the government’s case is UnitedHealth’s aggressive effort, starting in 2005, to review millions of patient records to look for missed revenue. These reviews often uncovered payment errors, sometimes too much and sometimes too little. The Justice Department contends that UnitedHealth typically notified Medicare only when it was owed money.

UnitedHealth “turned a blind eye to the negative results of those reviews showing hundreds of thousands of unsupported diagnoses that it had previously submitted to Medicare, according to the suit.

Justice lawyers also argue that UnitedHealth executives knew as far back as 2007 that they could not produce medical records to validate about 1 in 3 medical conditions Medicare paid UnitedHealth’s California plans to cover. In 2009, federal auditors found about half the diagnoses were invalid at one of its plans.

The lawsuit cites more than a dozen examples of undocumented medical conditions, from chronic hepatitis to spinal cord injuries. At one medical group, auditors reviewed records of 126 patients diagnosed with spinal injuries. Only two were verified, according to the complaint.

The Justice Department contends that invalid diagnoses can cause huge losses to Medicare. For instance, UnitedHealth allegedly failed to notify the government of at least 100,000 diagnoses it knew were unsupported based on reviews in 2011 and 2012. Those cases alone generated $190 million in overpayments, according to the suit.

While Medicare Advantage has grown in popularity and now treats nearly 1 in 3 elderly and disabled Medicare patients, its inner workings have remained largely opaque.

CMS officials for years have refused to make public financial audits of Medicare Advantage insurers, even as they have released similar reviews of payments made to doctors, hospitals and other medical suppliers participating in traditional Medicare.

But Medicare Advantage audits obtained by the Center for Public Integrity through a court order in a Freedom of Information Act lawsuit show that payment errors — typically overpayments — are common.

All but two of 37 Medicare Advantage plans examined in a 2007 audit were overpaid — often by thousands of dollars per patient. Overall, just 60 percent of the medical conditions health plans were paid to cover could be verified. The 2007 audits are the only ones that have been made public.

CMS officials are conducting more of these audits, called Risk Adjustment Data Validation, or RADV. But results are years overdue.

Secret Sauce In Maine’s Successful High-Risk Pool: Enough Money

KFF Health News, May 17, 2017

Without using the so-called “invisible high-risk pool,” Anthem would have increased rates more than 20%, says the superintendent of Maine’s Bureau of Insurance. Instead, the rates went up less than two percent.

This article first appeared May 17, 2017 on Kaiser Health News.

By Patty Wight, Maine Public

As the GOP health care bill moves from the U.S. House of Representatives to the Senate, many consumers and lawmakers are especially worried that people with preexisting conditions won’t be able to find affordable health coverage.

There are a number of strategies under consideration, but one option touted by House Republicans borrows an idea that Maine used just before the Affordable Care Act went into effect. It’s called an “invisible high-risk pool” — invisible because people in it didn’t even know they were.

The Maine pool earned higher marks than most state high-risk pools because it had a key ingredient: enough money.

“The problem is that in order to do the Maine model — which I’ve heard many House people say that is what they’re aiming for — it would take $15 billion in the first year, and that is not in the House bill,” Sen. Susan Collins (R-Maine) told Politico. “There is actually $3 billion specifically designated for high-risk pools in the first year.”

Here’s how the Maine model worked: When a resident applied for health insurance, they had to fill out a questionnaire. If they had certain medical conditions known to be costly, their application was flagged for the high-risk pool. To consumers, it was seamless: They paid regular premiums and got the same sort of coverage as any other enrollee in their chosen health plan.

What was different was how their medical bills were paid. The state set up a nonprofit entity — the Maine Guaranteed Access Reinsurance Association, or MGARA. Mitchell Stein, an independent health policy consultant, explained that the money to pay for these high-cost patients came from two sources: the insurance policy premiums paid by patients within that high-risk pool and a $4-a-month surcharge on all policyholders in the state.

This “invisible high-risk pool” was just one part of a larger health reform law in Maine, Stein said, and that makes a straight-up assessment of how well the strategy worked difficult. But it’s “a great theory,” he said, “and can be an appropriate way to handle these things.”

Eric Cioppa, superintendent of Maine’s Bureau of Insurance, agrees with Stein. “In Maine, for the period of time it was operating, it worked very well,” Cioppa said.

It was active from 2012 through 2013, as 2014 marked the advent of the Affordable Care Act’s marketplace insurance exchanges. Though in effect only for a brief period, Cioppa said, the invisible high-risk pool did keep costs down in the individual market, where Anthem was the largest insurer.

Without the invisible high-risk pool, Cioppa said, Anthem would have increased rates more than 20 percent, based on estimates the insurer had to make. Instead, the rates went up less than 2 percent.

But Steve Butterfield, policy director of the Maine-based advocacy group Consumers for Affordable Health Care, cautioned that one crucial component that made Maine’s high-risk pool work was that it was well-funded. The strategy proposed in the House Republicans’ American Health Care Act is not, he said.

“An analysis that was done on what this program would need showed that it would need $15 billion to $20 billion per year to have any kind of reasonable impact on premiums,” Butterfield said.

The GOP bill does allocate about $15 billion to $20 billion — but that is supposed to last almost a full decade, not per year.

“One of our concerns,” Butterfield said, “is if the feds are going to put this in place and only kick in a token amount of money, is it going to be up to the states to pick up the slack and pay into this thing to make it work?”

Furthermore, Butterfield said, as the law stands now, under the Affordable Care Act, there’s no need for high-risk pools of any sort. The idea to use invisible high-risk pools is a solution to a problem that the GOP health care bill creates. Right now people can buy insurance regardless of their health status, whether or not they have a preexisting condition. It’s the GOP bill that would allow states to opt out of that Obamacare rule.

“I don’t understand,” Butterfield said, “why it would be a good idea to, on the one hand, say, ‘Well, we’re worried about preexisting conditions, so we’re going to throw not enough money at a problem we’re creating. At the same time, we’re going to allow insurance companies to charge sick people more.’ ”

And the invisible high-risk pool, said consultant Stein, is just one small proposal within the larger health bill.

“There’s nothing inherently wrong with it,” Stein said, “but it doesn’t really fix all the other problems of the bill.”

Which, he said, include cuts to Medicaid and potential changes to what are, under Obamacare, guaranteed “essential benefits.”

This story is part of a partnership that includes Maine Public, NPR and Kaiser Health News.

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